HOW TO INVEST IN FARMLAND
If you call a farm broker and say “I have $100,000 to spend, what type of farm could I buy?” you will not like the answer. That $100,000 investment will purchase roughly 10-20 acres of solid cropland. You will have a difficult time renting that farm out to provide good cash flow because it is relatively small and most farming operations won’t consider renting a space smaller than 80 acres. Sizable farms of 80 acres and up are much more manageable, predictable, and thus attract the best lease contracts with the best farmers. Large farms are actually in high demand making farmers anxious to sign rental contracts for good prices.
American Farm Investors purchases larger tracts of prime farmland and divide the ownership among multiple investors. This allows the aforementioned investor with $100,000 to purchase a percentage ownership in a quality farm that provides good cash flow, steady rental contracts, and land appreciation possibilities. We invest in our own projects, having an ownership interest in every syndicated farm we purchase. We locate solid farms, purchase them with investor funds and our own equity, and find the best farmers to rent our land. Our initial target rate of return on a farm is 2-5% annually, which should increase over time as rental prices go up. That return is strictly cash flow to the investors. Investors get a check every year.
Institutional and Family Office
Family offices and institutional investors love working with American Farm Investors because they own title to the underlying property. Commodity exposure, fixed income and real assets are requirements for a balanced portfolio of any size. Grain farms provide excellent exposure to all three categories, with minimal risk to the investor. For these reasons and many more, farmland has become a hot investment vehicle over the past decade and the competition to find quality investment grade properties has increased. AFI can place large amounts of capital into productive properties.
We cannot predict where land values will go in the future, so we do not count land appreciation in our calculations. However, given the nature of land ownership over time, our investors can rightfully expect long-term land appreciation. Farmland has been appreciating at approximately 5% annually for the past several decades. There’s an old saying, “They don’t make any more land.” That statement is very true, and it’s ringing truer today with a growing world population and development of 3rd world economies. Our clients should expect their investment to grow over time.
AFI clients have a long term outlook on their farmland investments, and many intend on passing their ownership down to the next generation.
If you decide farmland belongs in your portfolio, we can take a trip to one of the farms we have in the investment pipeline. We can discuss soil types, possibilities for the future of that farm, meet the farmers and give you the peace of mind knowing that veterans of the industry have signed off on that farm as a great investment.
“American Farm Investors has delivered on every promise and then some. I am thrilled to be a part of such a rewarding investment.” – Jerry G., Champaign, IL (client since 2011)
“Working with Brian and AFI has not only been extremely exciting and rewarding but also very simple and transparent. Brian’s extensive knowledge of farmland investing and commodities gives me the highest degree of confidence and assurance. My investment has been managed with exceptional professionalism and forthrightness.” -H. Phillips, Lexington, KY (client since 2012)
“I was searching for an investment that would provide diversification and a conservative stream of income. The investment in farmland has worked well on both counts. I would advise any investor that is looking for these features to check into this type of investment.” -Mike S., Champaign, IL (client since 2011)
“I was looking for a way to invest in farmland and American Farm Investors has proven to be excellent. Projected returns have been met and I consider AFI to be a perfect low-risk alternative investment.” -Noah O., Birmingham, AL (client since 2011)
“As an investor in two farms sight unseen with Brian, it is obviously based on a high level of trust. AFI has delivered on everything they promised and I could not be more pleased. Just received my first dividend check!” -John G., Biloxi, MS (client since 2012)